Omkostningerne for producenterne af vindmøller er steget, og det bygger både på højere materialepriser og højere fragtomkostninger. Det rammer især europæise producenter som Vestas, fordi det går ud over indtjeningen, mens de kinesiske producenter har haft faldende omkostninger. Det øger konkurrencetrykket på de europæiske producenter, og det kan dæmpe udviklingen af vindkraften i Europa, netop mens den helt store omlægning fra sort til grøn energi finder sted.
Higher wind turbine costs continue to weigh on manufacturers’ margins
Wind turbine costs have been following an upward trend for a while now, fuelled by not only higher metal prices but also high freight costs, which have yet not come down to pre-pandemic levels
Furthermore, it seems that wind turbine costs are especially high for European players, while in China they have actually been on the decline since 2H2020
This has resulted in a margin squeeze for European manufacturers of these products
More than that, higher production costs for wind turbines also jeopardize the pace in which wind capacity in Europe (and the world) grows
While plans to increase the number of wind turbines are now more than ever on the agenda for the next years (and decades), soaring costs to produce such turbines might weigh on the profitability of (and thus, incentive for) these investments. A rise in the prices of commodities required for the development of wind turbines, as well as rising freight costs and supply chain disruptions, have made it quite hard for wind turbine manufacturers to hold on to their margins.
As shown in the graph below, large European wind turbine producers have been posting low (and even negative) turbine margins for the last quarters. Vestas, the world’s biggest wind turbine manufacturer, also came out with 1Q22 results last Monday, posting an all-time low turbine margin of negative 20.4%. The company has also warned that margins for the year will be likely lower than expected, as cost inflation and disrupted supply chains (exacerbated by lockdowns in China) will continue to weigh on its profitability.
The manufacturing of wind turbines is mostly comprised by steel, which accounts for around 85% of the total commodity cost. Other materials include copper (4%), aluminium (4%) and lead (4%). Based on this, we have developed an index that tracks the estimated production cost (excluding freight) for the manufacturing of wind turbines. This is mainly driven by high steel costs, which rose after the Covid-19 pandemic to levels not yet seen since the 2008 financial crisis, but also copper and aluminium, whose prices have gone up since the outbreak of the war.
Freight costs are also an important cost factor for manufacturers. And while global shipping costs have gone down from their peak in 3Q 2020, they remain relatively high. Shipping costs can rise due to a number of factors, including surging demand, backlogs at ports, lack of ships, and a shortage of dockworkers and truckers, which was amplified by Covid-19. Hence, further lockdowns in China (which reduces export volumes) might also reverse this downward trend in the upcoming months. Logistics bottlenecks also contribute to aggravate this situation.
Delivery lead time for turbine contracts signed in the first half of 2021 has reached all-times highs, to 12 months vs an average of 9.4 in 2020.
And while this has gone slightly down relative to 2H21, to 10.7 months, we expect supply chain disruptions and bottlenecks (forecasted to even worsen in the near-term, see more here) to continue to be an issue for wind turbine manufacturers.
